Vard Holdings

Vard Holdings has secured a contract with an international customer for the design and construction of one Diving Support and Construction vessel. The vessel is scheduled for delivery in mid-2016. While no contract value was disclosed, we note that Vard recently secured a contract for a Diving Support and Construction Vessel of similar specs with London based, Hardkand Group, which came in excess of Nok1b, concluding 2013 with a record order win of NOK13.4b, its largest annual order since 2007. The latest contracts effectively takes the groups' order book to ~NOK20b (FY12: NOK15.1b), stretching earnings visibility over the next 2-3 years. Overall, Maybank-KE remains sanguine on the counter, highlighting in a recent note that the `the worst is over’ for the counter and reiterated its Buy rating with TP $1.04, pegged at 8x average FY13-15 P/E. We note however that execution continues to remain the key for the group, and unless the group is able to overturn its Brazilian woes, sceptical investor’s response to the stock is likely to remain lukewarm. At the current price, Vard trades at 12.1x forward P/E and 1.3x P/B versus its local peers average of 9.5x and 1.2x respectively.